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Opinion 378

Case Name: 

In re Smith

Judge: 
U.S. District Court, Utah
Date: 
Apr-13-1995
Case Number(s): 
93C-25852
Status: 

APPEAL
180 B.R. 648 (D.Utah)

Body: 

The district court considered debtors' appeal of an order denying their objection to a proof of claim. Debtors filed a chapter 13 petition in the bankruptcy court. Three months later, Child Support Enforcement ("CSE") filed a proof of claim asserting a debt owed by Mr. Smith for past-due child support to Ms. Rayl. Debtors filed an objection. At the conclusion of testimony, Chief Judge Clark overruled debtors' objection, finding that the agreement between Ms. Rayl and CSE does not make the claim for past-due child support a dischargeable claim and that the agreement represents essentially a contingency fee arrangement that does not change the nature of the child support obligation. The sole issue on appeal was whether the Assignment for Collection executed by Ms. Rayl was an assignment contemplated by 11 U.S.C. § 523(a)(5)(A), which would effectively transform Mr. Smith's child support debt into a dischargeable claim. The court found that Ms. Rayl's intent was not to effect the type of assignment anticipated by § 523(a)(5)(A), but simply to enter into what is essentially a contingency fee arrangement with CSE. Therefore, the bankruptcy court's order denying debtors' objection to CSE's proof of claim was affirmed.

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Opinion 378
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